I 111th CONGRESS 1st Session H. R. 2963 IN THE HOUSE OF REPRESENTATIVES June 19, 2009 Mrs. Dahlkemper (for herself, Mr. Tim Murphy of Pennsylvania, Mr. Carney, Mr. Welch, Mr. Tonko, Mr. Braley of Iowa, Mr. Honda, Mr. Bright, Ms. Eddie Bernice Johnson of Texas, Mr. Kissell, Mr. Childers, Ms. Fudge, Mr. Kagen, Mr. Fattah, Mr. Boswell, Ms. Kaptur, Mr. Massa, Mr. Altmire, Mr. Sires, Mr. Connolly of Virginia, Ms. Wasserman Schultz, Mr. Moran of Virginia, and Mr. Dingell) introduced the following bill; which was referred to the Committee on Ways and Means A BILL To amend the Internal Revenue Code of 1986 to provide incentives for improving small manufacturers’ computer technology.

1.

Small manufacturers’ computer hardware and software tax credit in lieu of expensing

(a)

In general

Subpart D of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new section:

45R.

Small manufacturers computer hardware and software tax credit

(a)

In General

For purposes of section 38, the small manufacturers’ computer hardware and software credit determined under this section for the taxable year is the lesser of— (1)50 percent of the amount paid or incurred by the taxpayer during the taxable year for qualified computer hardware and software property; or (2)$35,000.00. (b)

Qualified Computer Hardware and Software Property

For purposes of this section, the term qualified computer hardware and software property means any computer hardware and software property for use in any small manufacturer located in the United States— (1)the original use of which commences with the taxpayer; (2)which is property of a character subject to the allowance for depreciation; and (3)which is placed in service by the taxpayer after the date of the enactment of this section. (c)

Computer Hardware

For purposes of this section, the term computer hardware includes disk drives, integrated circuits, display screens, cables, modems, speakers, and printers. (d)

Computer Software

For purposes of this section, the term computer software means programs, programming languages, data that direct the operations of a computer system or network, enterprise resource planning software, manufacturing resource planning software, materials requirements planning software and software designed to enhance Internet capabilities. (e)

Small Manufacturer

For purposes of this section: (1)

In general

The term small manufacturer means— (A)any unincorporated business, any partnership, or for-profit corporation; (B)with respect to a taxable year, any which employed an average of 50 or fewer employees on business days during the preceding calendar year. For purposes of the preceding sentence, a preceding calendar year may be taken into account only if the small business was in existence throughout such year. (2)

Small manufacturers not in existence in preceding taxable year

In the case of a small manufacturer which was not in existence throughout the preceding calendar year, the determination under paragraph (1) shall be based on the average number of employees that it is reasonably expected such employer or sole proprietor will employ on business days in the current calendar year. (f)

Calculation of Number of employees

For purposes of subsection (e), the number of employees of a subsidiary of a wholly owned corporation includes the employees of— (1)a parent corporation; and (2)any other subsidiary corporation of that parent corporation. (g)

Basis Adjustment

For purposes of this subtitle, if a credit is determined under this section in connection with any expenditure for any property, the increase in the basis of such property which would (but for this subsection) result from such expenditure shall be reduced by the amount of the credit so determined. (h)

Termination

This section shall not apply with respect to any property placed in service after December 31, 2011.

. (b)

Credit To be part of general business credit

Section 38(b) of such Code is amended by striking plus at the end of paragraph (34), by striking the period at the end of paragraph (35) and inserting , plus, and by adding at the end the following new paragraph: (36)the small manufacturers’ computer hardware and software credit determined under section 45R(a). . (c)

Denial of double benefit

Section 280C of such Code is amended by adding at the end the following new subsection: (f)

Small Manufacturers Computer Hardware and Software Credit

No deduction shall be allowed for that portion of the expenses otherwise allowable as a deduction for the taxable year which is equal to the amount of the credit determined for the taxable year under section 45R. . (d)

Allowance of credit against alternative minimum tax

Subparagraph (B) of section 38(c)(4) of such Code is amended by striking and at the end of clause (vii), by striking the period at the end of clause (viii) and insert , and, and by inserting after clause (viii) the following new clause: (ix)the credit determined under section 45R. . (e)

Transferability of credit

Nothing in any law or rule shall be construed to limit the transferability, through sale and repurchase agreements, of the credit allowed by reason of section 45R. (f)

Effective date

The amendments made by this section shall apply to taxable years ending after December 31, 2008.